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Subdued oil demand growth means the prospects for refiners and fuels distributors are poor,with many already facing strong competition. The purchase and reopening of Petroplus' Antwerp plant should reduce downstream uncertainty. The gas market has greater potential, both in terms of rising domestic demand and the scope to re-sell surplus LNG through regional pipeline links. The market is mature, meaning there is a risk that leading industry players may divest as they seek higher growth and wider margins elsewhere.

The main trends and developments in Belgium's oil & gas sector are:

- Total announced plans in September 2012 to invest US$1.3bn in its Antwerp refinery to increase diesel production capacity. The refinery would not see a cut in its 350,000b/d output, but would produce less heavy fuel in a move that Total says could result a US$500mn boost to its refining and petrochemical earnings.

- Petroplus, Europe's largest independent refiner, announced in January 2012 that it had shut down its 107,500 barrels per day (b/d) Antwerp refinery, along with others in Europe, after a syndicate comprising 13 banks froze a US$1bn credit facility
the company was using to buy crude feedstock. In May 2012, Gunvor Group said that it had successfully completed the purchase of the Antwerp refinery, along with the remaining inventory of stock located at the plant. Cyprus-registered Gunvor is one of the world's largest oil traders and exports about 30%of Russia's crude oil.

- With nuclear generation capacity to remain stagnant over the next few years, before reactors are dismantled under the proposed phase-out, new electricity generating capacity is likely to be largely gas-fired, with an emphasis on renewables. We forecast that Belgian gas demand will rise from an estimated 19.0bn cubic metres (bcm) in 2012 to 20.2bcm by 2016 and 22.1bcm by 2021 - all met by increased pipeline and liquefied natural gas (LNG) imports.

- Gas could flow in both directions between France and Belgium by 2015 after the countries'energy regulators approved a new interconnection point at the Belgium border town of Veurne.

The Veurne interconnector would connect non-odourised gas coming from France with the Belgian grid, according to project documents seen by energy data provider Platts. The interconnector would allow 8.4bcm-11.3bcm to be exported from France to Belgium each year.

The French Commission de régulation de l'énergie (CRE) expects it to come online in late 2014 or early 2015.

- Belgium imported a net 6.57bcm of gas in the form of LNG in 2011, with Qatar the dominant supplier. We expect volumes to move higher in line with rising gas consumption, although nearBelgium term progress is likely to be slow. Belgium is expected to import 7.0bcm per annum of LNG by 2016 and 10.0bcm by the end of our 10-year forecast period in 2021.

- Similar to most of developed Europe, Belgium is registering slow growth in oil consumption. By 2016, we project demand rising to 672,000b/d, which will result in imports of 660,000b/d. By 2021, we expect this to reach 694,000b/d, with the country requiring imports of 683,000b/d. The cost of crude imports will be an estimated US$24.88bn in 2012, easing to US$22.48bn by 2016.

The cost of gas purchases is put at US$10.18bn for 2012 and should be US$9.38bn in 2016.

Combined oil and gas costs are forecast at US$31.86bn for 2016.

At the time of writing we assume an OPEC basket oil price for 2012 of US$107.10/bbl, falling to US$99.10/bbl in 2013.
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